When you choose Chapter 13 bankruptcy, also known as a wage earner’s plan, you’ll come up with a plan to repay all or part of your debts over a few years. This option is different than Chapter 7 bankruptcy, wherein you would liquidate your assets, pay your creditors with the proceeds, and terminate your business.
Chapter 13 Bankruptcy Process
First, you will need to file a petition with the bankruptcy court in the right jurisdiction. Sometimes, creditors can file this petition whether or not you want them to. If you file for Chapter 13 bankruptcy, you must give the court information about your:
- Assets and liabilities
- Current income and expenditures
- Executory contracts and unexpired leases
- Statement of financial affairs
In addition, you’ll also need to provide the following:
- Credit counseling certificate and any debt repayment plan developed with credit counseling
- Evidence of recent payment from employers
- Your income information and any anticipated increase in income or expenses
- Any interest in federal or state qualified education or tuition accounts
- Certain tax information
- A list of all creditors and how much you owe, as well as all your property and monthly living expenses
The courts will also charge some filing and administrative fees.
After Filing for Chapter 13 Bankruptcy
Filing a a chapter 13 petition will automatically “stay,” or stop, most collection actions against you or your property. This time period is likely short, and there are certain actions it does not stop. As long as the stay is in effect, creditors cannot continue lawsuits or file new ones. They cannot garnish wages or call you to demand payments. You will then have to file a repayment plan with the petition or within 14 days after the petition is filed, unless the court gives you an extension. A few weeks after you file the petition, a trustee will hold a meeting with you and your creditors to ask and answer questions and resolve problems with the plan.
In essence, a plan under Chapter 13 acts like a consolidation loan that allows you to make payments to a trustee who then distributes those payments to creditors. The U.S. Courts note on their Chapter 13 information page that the law regarding the scope of chapter 13 discharge is complex and has undergone major changes recently. They also recommend that debtors consult with competent legal counsel before filing a petition.
Get Help When You Need It Most
Contact Bankruptcy Done Right™ if you’re considering Chapter 13 bankruptcy. Our team of attorneys, CPAs, and financial experts can help ensure you make the best decisions for yourself and your business. We’ll help you navigate the bankruptcy process with a customized, focused, and efficient approach, getting you to the other side with as little hassle as possible.
Call 866-246-7690 or schedule a consultation online. There is no obligation when you speak with a member of our team. You’ll put your best foot forward with Bankruptcy Done Right™.